Sony game division gets profitable with strong Q1 results

Though the corporation as a whole experienced a big drop in profit during the …

The business quarter encompassing the first half of the summer is typically a tough time for gaming companies, as development costs pile up and software releases are held in preparation for the holiday season. These factors tend to send companies home with low net incomes and occasional losses. However, Sony's gaming division made it through the lull with a strong showing from the PlayStation 3 that pushed its net numbers into the black.

The company issued its quarterly results today in Japan. Though Sony Corp. as a whole saw profits drop nearly 50 percent year-over-year, the company's gaming division shone through as one of the company's more profitable divisions, despite the long period of dark times that followed the rough launch of the PlayStation 3. Sony's gaming division posted strong results for the quarter, reaching June 30 vastly more profitable than it was in Q1 2007. While last year's Q1 results came in at an operating loss of ¥29.2 billion ($269 million), the company posted an operating income of ¥5.4 billion ($51 million) this year. Overall sales and operating revenue for the quarter reached ¥229.6 billion ($2.1 billion), up 16.8 percent from last year.

Sony attributes the difference to PS3 hardware cost reductions and improved sales numbers for both PS3 software and PSP hardware. A strong set of software releases, including big multi-platform titles like Grand Theft Auto IV and exclusives like Metal Gear Solid 4 and some hardware-software bundles, helped to bolster sales numbers.

Strong sales of the PlayStation 3 and the PlayStation Portable in the quarter drove a year-over-year rise in hardware shipped. Worldwide hardware units sold for the three platforms came in at 1.51 million for the PS2, 3.72 million for the PSP, and 1.56 million for the PS3. That works out to be a 40 percent and 55 percent increase in units moved over last year for the PSP and the PS3, respectively.

Though there a great decrease in PS2 software sales, both PS3 and PSP software did well in the quarter. PS2 software units sold dropped to 19.3 million down from 31.1 million, but PSP units racked up 11.8 million units while PS3 units rose to 22.8 million—a staggering 385 percent increase in units sold for the quarter, year-over-year.

In the wake of the strong quarter, Sony said its forecasts for the remainder of the fiscal year remain on track. The company still expects PS2 hardware sales to topple 9 million units, PSP hardware sales to best 15 million units, PS3 hardware sales to reach 10 million units, and combined software sales for the three platforms to hit 250 million units.

With the exception of Metal Gear Solid 4, Q1 wasn't exactly a season of Sony exclusives, yet the company still managed to ride through it all relatively unscathed. As with its competition at Nintendo and Microsoft, rough waters will soon give way to smooth sailing through the latter quarters of the year, as the big summer-end titles lead into the fall and holiday blockbusters.